Consumer environmental awareness and privatization

H. Caspi, Y. Perlman

Research output: Contribution to journalConference articlepeer-review


Resource shortages, environmental degradation, and pollution have forced businesses to change their business practices to become more sustainable. In addition, consumers increasingly demand eco-friendly products. This paper examines whether governments should privatize a company whose production process generates environmental pollution. We assume that the firm is in competition with a foreign private firm, that the firm invests in eco-friendly programs, and that consumers are environmentally aware. We find that: (a) Consumers' environmental awareness influences firms' decisions regarding production levels and environmental investments. (b) As the government increases the degree of privatization, the public firm decreases its eco-friendly level and the level of its production. In contrast, if the government deceases the level of privatization, the public firm increases its eco-friendly level and its level of production. The private firm subjected to change in the extent of privatization, both its eco-friendly level and the level of its production are determined by the magnitude of the consumer environmental awareness. (c) The optimal privatization policy that maximizes the social welfare is partial privatization.

Original languageEnglish
Pages (from-to)1134-1140
Number of pages7
Issue number10
StatePublished - 2022
Event10th IFAC Conference on Manufacturing Modelling, Management and Control, MIM 2022 - Nantes, France
Duration: 22 Jun 202224 Jun 2022

Bibliographical note

Publisher Copyright:
© 2022 The Authors. This is an open access article under the CC BY-NC-ND license (


  • Consumers environmental awareness
  • Environmental investment
  • Privatization


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